Mike Moran

"Drivers who switched to us saved an average of $538." Maybe you've seen that claim on TV commercials or online. So it sounds like their auto insurance is cheaper, right? Well, maybe not. This is actually a tricky claim, designed to fool us. It actually doesn't tell us a thing about whether this company has cheaper auto insurance rates than any other one. Many insurance companies make this claim and it is meaningless. The question is, "Is it good marketing?"

Before we delve into that question, some of you might be dying to know why it is that this claim is meaningless, because it sounds like this company must be cheaper, doesn't it? I will walk you through it.

When someone compares insurance rates, and find that this company is higher-priced, they don't switch. So, when people do switch, it's almost always because the rates are lower. That means that every insurance company can total up the average savings of those that switch. So this claim tells you nothing about which companies are cheaper or more expensive, although it sounds really good.

But the question remains, is this good marketing?

I say no, and social media is the main reason why. TV commercials, salespeople, and other marketing can put out these kinds of fatuous claims and fool you. Maybe this claim fooled you. Maybe you even got a quote from a company that claimed this. Maybe you even saved money, so you switched.

But now that I have used social media to puncture the claim, it might not spur you to the same action. And now you might look with suspicion upon any company that tries to foist this claim on you. Because with social media, you can no longer fool one customer at a time. You need to fool all of them. And as each tricky claim is unveiled, you are not only forced to come up with another tricky claim, but you lose a little credibility each time, so each claim rings a bit more hollow, even if people can't puncture the claim.

Is that worth it? If trust is the main ingredient in getting someone to buy, is it worth using tricky claims to shortcut that process? Now understand, I am not accusing insurance companies of lying or in any way making a false claim. The people who switched really did save $538, I am sure. But they are carefully formulating that statement to fool people into thinking that all or at least most people save that money by switching, which is hardly true.

There is nothing illegal about this. There isn't even anything unethical about this, I don't think. My question, though, is whether it is smart. In the long run, will it work, or is it just one more desperate scorched earth tactic that wins in the short run but loses badly over time?

Do you have any claims like this one? If someone wrote a blog post about your claim, what would you say?

Comments(11)

Great article Mike! I was one of the people who fell for this marketing effort. The commercial did its job, it got me to call but they just could not deliver a policy cheaper than the one I already have.

I see this sentence "Drivers who switched to us saved an average of $538" delivered as a promise. When the promise fail to reach customer expectation that's bad marketing strategy. If it's honest proof then it's a good one. Do you agree?

There are two reasons I don't agree, The first is that even though it might be true, it is misleading. Customers thinks this means that your insurance is cheaper, but we all know that isn't true if every company can use some form of that claim. So when customers find out that the claim is bogus, they feel misled, which is bad for the brand. Just seeing similar claims from different companies cheapens its effectiveness.

But the more important reason is that there is no differentiation here. Do you buy every product that has the lowest price? Always stay at Motel 6? Get the free phone instead of the iPhone? No, of course you don't. So, why have insurance companies just given up on differentiation to claim they are the lowest price?

A claim that is merely truthful is the price of admission. A claim that is persuasive (to convert now), and differentiated (to begin a long-lasting sustainable relationship) is what you are going for.

Posted by: Mike Moran on February 25, 2015

Mike, I think companies should be more clear while making these type of claims so the prospects gets the real meaning of the claim. Trust is the most important factor of B2C relationship, if one business bash the interest of their customers then they can't make good business for a long time.

I don't agree @havalandırma that the commercial did its job. The job of all marketing is attract customers that buy your product. It's not surprising that a commercial focused on price will attract people who want a lower price. If that insurance company (like most of them) don't really deliver lower prices, their advertising is attracting people who mostly won't buy from them.

We as marketers like to think that if we get a response that the marketing did its job, but if you are targeting the wrong markets, you are just wasting your money.

Posted by: Mike Moran on March 5, 2015

In my opinion, the function of the ad is based on its goal. If, for example, a client came to us and said, I want only people that are looking for my specific product, that will buy it, and that is it, then that ad will be about the benefits that ONLY my demo finds valuable. None of this, "Well it worked for ONE person out of 1,000 so....it could work for you" stuff. Just straight facts to drive qualified calls.

On the other side of the coin, if that same client wants to drive calls to let their sales people earn their salary, then we would run advertisement that do just that. Like the somewhat successful campaign by that company you have never heard of, Geico, "Could save you 15% or more on car insurance". I called, they couldn't...oh well. Do you think they would spend the Millions of dollars each month on ad space and TV spots if it didn't work? It makes the phones ring, and the website traffic go up...That is the goal of the campaign.

Is trickery good? Of course not. As you said, with Social Media, it makes it difficult. However, if it didn't work, IE, you gain more than you lose, those publicly traded, Billion dollar a year firms wouldn't do it at the rate they are now. That I know for sure.

@Marcus, you are right that there are some firms that this claim does work for because they often are the lowest-priced. My point is that if every firm makes the same claim, it can't possibly be working for all of them. It yields calls, but not sales.

I also agree with you that as an ad agency it is your job to do what the client wants, and if they want an ad that gets attention and calls and that is how they are judging success that you better deliver on that. But I am also saying that it's not a terribly smart goal--they need to be driving sales, not merely attention.

Thanks for taking the time to comment.

Posted by: Mike Moran on March 5, 2015

Yes, I think tricky marketing claims do help marketers. But, the only thing that need to be taken care is that the trust of the customers doesn't get lost at the end.

@William, I am not really understanding how tricking people leads to them trusting you, but maybe you see something I am missing. Maybe you are saying that there is a limit to how much you trick them before trust is lost, but I guess I don't understand why we would want to take any chances at all. I would be doing things to increase trust, not trying to calculate how much I can trick people before trust is lost.

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